Marxs Critique of Classical Economics

It seems hardly necessary to stress the fact that Marx was among the warmest admirers as well as the keenest students of that trend in economic thinking for which he invented the term classical political economy. It is important to remember that Marx used this term in a way radically different from that of many later writers, in particular Keynes. By classical political economy Marx meant to designate that strand in economic theory originating in France with Boisguillebert (1646-1714) and in Britain with William Petty (1623-87) and reaching its high point with the work of Smith and Ricardo (1772-1823) who gave to classical political economy its final shape (Marx, Critique of Political Economy). It is important to keep this definition in view because the term classical economics has often been used in a much broader sense  for Keynes it was a school embracing all those who, following Ricardo, subscribed to one version or another of Says Law, who believed, that is to say, in the self-regulating nature of capitalist economy. On such a definition, classical economics culminated with Marshall and Pigou. (For Marxs characterisation of classical economy, see Marx, 1, footnote) Marx was always conscious of the enduring achievements of this school when contrasted with the work of the vulgar school, which emerged in the period following Ricardos death. In Marxs estimation, classical political economy constituted a decisive stage in the investigation of the capitalist mode of production; around 1830 this phase begins to draw to a close, a close intimately bound up, for Marx, with the appearance of a new social and political force increasingly conscious of itself, the working class. Marx did not, of course, mean to imply that in a somewhat mystical manner the modern working class killed political economy. Rather he wished to stress that the methodological limitations of classical political economy increasingly paralysed it in the face of this new phenomenon.

The ahistorical nature of political economy

The fact that political economy was unable to grasp the significance of the emergence of the working class and the implications of its struggle against capital only underscored, for Marx, the grave methodological and philosophical weakness which he detected in the work of Ricardo. For Marxs considerable respect for the classical economists should not blind us to the fact that he saw in them a series of weaknesses which were to prove fatal. It is, of course, the case that the attack upon Ricardianism after 1830 was increasingly inspired by narrow ideological and political considerations, a point rightly stressed by Meek (1967). And such attacks were sharpened by the fact that a trend within the emerging working-class movement (Ricardian Socialism) tried consciously to deploy Ricardian theory as a weapon against the capitalist order. But this is by no means the end of the story. For it is also undoubtedly the case that the opponents of Ricardo (Bailey is a good example) were able to seize upon real, unresolved, contradictions in the Ricardian system. It is this aspect of the problem on which we will concentrate.

In considering the deficiencies of Ricardos work which had opened it up to these attacks, attacks which Ricardos followers were unable to combat, Marx was to centre his entire critique of political economy on what he considered its decisive weakness its tendency to view society ahistorically, or, more specifically, its inclination to treat capitalist economy as one working directly in accordance with the laws of nature. All Marxs detailed criticisms of political economys erroneous conceptions of value, money, capital, etc., which fill the pages of Capital and even more so of Theories of Surplus Value, rest finally upon this, his basic criticism. It is one anticipated, though not as yet exhaustively worked out, in The Poverty of Philosophy where we find the following:

Economists express the relations of bourgeois production, the division of labour, credit, money, etc. as fixed immutable, eternal categories.... Economists explain how production takes place in the above mentioned relations, but what they do not explain is how these relations themselves are produced, that is the historical movement that gave them birth . . . these categories are as little eternal as the relations they express. They are historical and transitory products. (Marx, Poverty of Philosophy, authors italics).

This attack by Marx upon the ahistorical standpoint of the classical economists must be carefully considered, for it can easily be misunderstood. Many have taken Marx simply to mean that Smith and Ricardo were either unaware of or not interested in pre-capitalist economic forms of production. This is, however, quite wide of the mark; Smith was concerned perhaps more than anybody else to demonstrate the superiority of the capitalist form of production as a means of creating wealth in contrast with feudal economy. Others, perhaps somewhat less naive, have assumed that Marx aimed simply to make Ricardos analysis dynamic, to set in motion the work of the classical school, as Althusser puts it (Althusser and Balibar, German Ideology). Neither of these interpretations of Marxs principal objection to the standpoint of classical economy can be sustained on the basis of a reading of the appropriate texts.

Marx, as a materialist, understood that the categories of political economy were a product of historical development and specifically of the historical development of the social relations of production. This point must be emphasised if only because of the attack launched by Althusser and others against this conception, which we believe to be at the very centre of Marxism. In his review of the history of political economy, Marx at all times insists upon the objectivity of the categories of the science: They are socially valid and therefore objective thought forms, he writes. Marx was here stressing a vital point  namely, that science always necessarily develops through definite forms outside the individual consciousness. Men always start with certain definite aims and motives and the leading figures of political economy were, in this respect, no exception. But the history of political economy cannot be reduced to a review of the conscious aims and motives of its leading representatives. Science develops always under determined historical conditions in that it must always commence its work in and through the categories which have been historically handed down to it, categories which reflect the work of all previous thinkers in the field. Thus, just as Smiths work can only be understood in connection with the legacy of Physiocracy, so Ricardos work was very much an attempt to deal with the unresolved questions bequeathed to him by Smith.

Marx attacked the political economists precisely because they took the categories of their science uncritically. His charge of ahistoricism meant essentially this: the political economists fetishistically accepted the available concepts as fixed and unalterable. Political economy took its categories or granted precisely because it did not know the historical process through which they had been created. It was unable to reproduce this real process in thought and therefore saw in the categories of bourgeois political economy the expression of the essence of bourgeois production. In short, it fell under the illusion that the relations of modern economy not only appeared according to the categories of political economy, but that these relations really were as they appeared.

In this light, it is perhaps possible to begin to see the central importance which Marxs investigations of the history of political economy hold for his work as a whole. In bourgeois social science, the history of any discipline is invariably taken either as background material before the substantive exposition of the subject commences, material which has no organic connection with the principles of the subject, or the development of the subject matter is viewed teleologically history is reduced to a search for examples from the past designed to show that all previous efforts in the subject were, more or less, crude anticipations of the subject as it exists today. Marx, in his review of the work of Petty, Smith, Ricardo and others, rejected this essentially idealist position. He is not interested in past thinkers merely from the point of view of tracing the origin and growth of his own ideas, nor merely in paying his intellectual debts, as it were. The Theories of Surplus Value (intended by Marx, we remember, as a fourth volume of his work) is not a history of economic thought in the conventional sense. It was, Engels tells us,

A detailed critical history of the pith and marrow of Political Economy, the theory of surplus-value and develops parallel with it, in polemics against predecessors, most of the points later investigated separately in their logical connection in the manuscripts for Books II and III. (Engels, Preface to II).

By critique Engels here means that the categories of political economy were to be subjected to criticism not by formally comparing them with some object lying outside them but by drawing out the contradictions in these concepts and showing how, in practice, these contradictions had been resolved. This was a task which could be carried out only by somebody conscious of the fact that these categories were themselves a product and a manifestation of the actual emergence of the social relations of capitalist production.

To make more specific Marxs notion of the ahistorical, let us take an illustration  the law of value. At one point Marx draws attention to the fact that for thousands of years  ever since the appearance of commodity production in the ancient world  men had striven to discover the nature of value. It was only in the eighteenth century that they were able  in the shape of political economy  to make significant progress along this road. And this progress was made possible only because the social conditions in which political economy operated  the fact that commodity production was becoming predominant  made possible the clarification of issues which previously had, of necessity, remained obscure. Now when Marx criticised the political economists for the ahistorical nature of their work, he meant that they could not grasp that their own science had emerged and developed only under these determinate conditions. Political economy laboured under the serious misapprehension of all bourgeois thought that the categories of its subject (value, capital, money, labour, etc.) were not only the product of merely individual minds but that the laws which these minds had (inexplicably) discovered were valid for all epochs. They conflated the laws specific to a determinate mode of production with laws they thought to he universally valid; hey confused social with natural law. Political economy was fond of the parable of Robinson Crusoe. Marx did not object to the indulgence in this type of story as such. He did object, however, to the fact that the modern (eighteenth-century) individual was projected back into history. The individual was not conceived as developing historically through definite social relations, but as posited once and for all by nature. History was confused with nature; pre-capitalist economic forms were treated with the same disdain as Christians treated pre-Christian religious forms.

Now in drawing attention to this ahistorical outlook of Ricardo and others, Marx was not making a general criticism about the starting point of these thinkers which, once having been made, could be left behind, as it were. Marxs Capital is not political economy plus some different sociological-cum-historical framework. For Marx, the ahistoricism of political economy is a fatal weakness which ultimately permeates every aspect of its work and is the ultimate source of its disintegration. But before trying to demonstrate this, let us briefly review the history of political economy to illustrate Marxs conception that its categories were the product of a definite historical development, and, in this sense, objective.

The main stages in the history of political economy

For Marx, Physiocracy was the first genuine school in political economy. It consisted of a group of writers all of whom sought to provide a critique of mercantilism, a system which had imagined that value and its magnitude resulted from exchange. Against this the Physiocrats counterposed the notion that forms of production were physiological forms arising from the necessities of production and independent of will and politics. They thereby turned the attention of economics towards a study of the social conditions of production. We know of course that the decisive weakness of this school lay in the fact that this production was seen only in its immediate, concrete form; for according to Quesnay and his followers labour on the land was alone productive of value, a conception which persisted with Smith, although in the case of the latter it occupies only a subordinate position. This narrowness in the Physiocratic view was, Marx held, a reflection of the then limited stage reached in eighteenth-century French economy which remained predominantly based upon agriculture. Despite this limitation, the work of the Physiocrats none the less constituted a decisive step forward for all the work that was to follow in the investigation of capitalist economy. This was so because the source of contradictions in the Physiocratic system stemmed from its efforts to analyse feudalism from a consistently bourgeois standpoint.

When Marx turns to deal with the work of Adam Smith he again stresses that the advances which this work involves have their ultimate source in the economic changes taking place in the latter half of the eighteenth century. The Physiocrats had been able to begin the investigation of surplus value (the difference between the value of labour power and the value created by it) only because it appears most palpably in the sphere of agriculture, the primary branch of production. The total means of subsistence which the labourer consumes is smaller than the total means of subsistence he produces. However, in manufacturing  which was emerging much more rapidly in Britain than in France during this period the worker does not directly produce either his means of subsistence or an excess of them. Under manufacturing the process is mediated, is an indirect one, operating through the various acts of circulation of all commodities within the capitalist system. The development of the value concept, which is the most important single feature of Smiths work  a concept missing in Physiocracy  was an expression of this indirect, mediated form taken by production under capitalism. And this was equally true in the case of surplus value; while this surplus appeared in the form of a surplus of use-values (agricultural products) no abstract conception of its nature was either possible or necessary for pre-Smithian economics.

Here, Marx considered, lay the true significance of Smiths work  he was the first to attempt an investigation of the abstractions of value and surplus value. Specifically, the advance marked by The Wealth of Nations (1776) was to be found in the fact that it grasped that labour in general (and not one of its forms) is value-creating. Marx again draws attention in his commentary on Smith to the material basis for this step forward. The notion of labour in general was itself possible only in a rapidly changing economy in which the traditional bond between an individual and his labour was being shattered. The indifference to the particular type of labour when considering value  Smiths real, if at times inconsistent, point of criticism against the Physiocrats  implied the existence of a highly developed variety of concrete forms of labour, none of which predominated and all of which were being dissolved by the rapid extension of the market.

But as in the case of the French economists, so now in the case of Smith: Marx sees definite limits to these important advances. Marx regarded Smith as a transitional figure and one to whom all later schools, including that of modern (neoclassical) theory, can, with some justification, trace their origin. From the point of view of the method of political economy Smith continued and extended the classificatory work of his predecessors, notably that of William Petty. At the same time Smith was the first to attempt an abstract analysis of the capitalist mode of production  a search for the laws, that is the regularities, of its development. It was this latter side of his work which was to be carried forward by Ricardo some fifty years later. Marx characterises Smiths work in the following way: on the one hand Smith tried to uncover those laws which would reveal the essential qualities of the economic system which was then emerging in Britain. Herein lay the significance of his idea of the hidden hand summed up in the well-known statement, It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner but from their regard to their own interest (Smith, Value, Studies by Marx). Here is Smiths conception of an economic system which worked independently of the aims of any individual. This aspect of Smiths work Marx refers to as its esoteric element. On the other hand, Marx also finds in Smiths writings a considerable exoteric element, that is, one concerned not with the inner structure of economic relations, but with their immediately outward manifestation, as those relations present themselves in the sphere of competition. It was this naive duality (Marxs phrase) which Ricardo identified as the major weakness at the heart of The Wealth of Nations. It is a duality most clearly shown in Smiths conception of value. On occasions, Smith sees the value of commodities as determined by the quantity of labour involved in their production, as when he gives the example of beaver and deer:

In that early and rude state of society which precedes both the accumulation of stock and the appropriation of land, the proportion between the quantities of labour necessary for acquiring different objects seems to be the only circumstance which can afford any rule for exchanging them for one another. If amongst a nation of hunters, for example, it usually costs twice the labour to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer. It is natural that what is usually the produce of two days or two hours of labour, should be worth double what is usually the produce of one days or one hours labour. (Smith, Value, Studies by Marx)

In other places, however, Smith drops this labour exchange theory in favour of a labour command notion of value, or, what amounted to the same thing, a theory which sees exchange-value as determined by the level of wages. Thus we find Smith saying, The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to command. That is to say, the appearance of wages along with profits and, once private property and land is established, rent, for Smith overthrow the determination of value by labour-time. All three factors had to be taken into account and he adopts what is essentially an adding-up theory of value.

In every state of society the price of every commodity finally resolves itself into some one or other or all of these three parts; and in every improved society all the three enter more or less, as component parts, into the price, of the far greater part of commodities.

Ricardos achievement

Ricardos greatest single achievement was that of all his contemporaries he recognised most clearly this dual conception of value in Smith and aimed, by overcoming it, to make political economy a coherent and unified science. This he did by endeavouring to demonstrate that the determination of value by labour-time could be made consistent with the existence of wages, profits and rent. Indeed, he went further and attempted to show that the determination of value by labour-time was the only sound basis on which the distribution of the social product between wages, profit and rent could properly be explained, a task which he took to be the major one facing political economy. From the very outset of the Principles Ricardo notes the different and ultimately incompatible conceptions of value in The Wealth of Nations.

Adam Smith, who so accurately defined the original source of exchangeable value and who was bound in consistency to maintain that all things become more or less valuable in proportion as more or less labour was bestowed on their production, has himself erected another standard measure of value, and speaks of things being more or less valuable in proportion as they will exchange for more or less of this standard measure. Sometimes he speaks of corn, at other times of labour, as a standard measure; not the quantity of labour bestowed on the production of an object, but the quantity which it can command in the market: as if these were two equivalent expressions, and as if, because a mans labour had become doubly efficient and he could therefore produce twice the quantity of a commodity, he would necessarily receive twice the former quantity in exchange for it. (Ricardo)

This same point is made when Ricardo, once more objecting to Smiths inconsistency, writes:

In the same country double the quantity of labour may be required to produce a given quantity of food and necessaries at one time than may be necessary at another and a distant time; yet the labourers reward may possibly be very little diminished. If the labourers wages at the former period were a certain quantity of food and necessaries, he probably could not have been sustained if that quantity had been reduced. Food and necessaries in this case will have risen 100 per cent if estimated by the quantity of labour necessary to their production, while they will scarcely have risen in value if measured by the quantity of labour for which they will exchange.

Ricardo knew that the duality to which he was here drawing attention had to be eliminated if political economy was to progress as a science. It was through his efforts tog! apple with the theoretical problems left by Smith that Ricardo was forced to develop a quite different method in he analysis of economic phenomena. It was this new procedure which constituted for Marx Ricardos great service to the science. Political economy, Ricardo came to insist, must begin with one fundamental principle  the determination of value by the quantity of labour bestowed upon the production of a commodity. All those economic phenomena (from the realm of competition) which appear to contradict this law must be rendered compatible with it, and the law of value thus made the axis of a scientific political economy. [Ricardo] demonstrates that this law governs even those bourgeois relations which apparently contradict it most decisively (Marx, Critique of Political Economy). Here lies the clue to the true significance of the English adage Its the exception that proves the rule: the task of science for Ricardo was to show that the law of value was, above all, upheld precisely through those phenomena which seemed, at first sight, to overthrow it.

The general method adopted by Ricardo in his Principles is as follows: after stating the law of value in a much less ambiguous manner than Adam Smith, Ricardo then proceeds to consider a number of questions in turn. He examines the extent to which the law of value is in contradiction with the manner in which it appears in competition, as it presents itself to the unscientific observer. Ricardo insists, Marx tells us, that,

The basis, the starting point for the physiology of the bourgeois system  for understanding its internal organic coherence and life-process  is the determination of value by labour-time. Ricardo starts with this and forces science to get out of the rut, to render an account of the extent to which the other categories  the relations of production and commerce evolved and described by it, correspond to or contradict this basis, this starting-point. (Marx, Theories of Surplus Value)

The nature of this method can be illustrated by reference to the example of rent. The chapter on rent in the Principles (Chapter 2) begins, It remains however to be considered, whether the appropriation of land and the consequent creation of rent, will occasion

any variation in the relative value of commodities, independently of the quantity of labour necessary to production (Ricardo). Here Ricardo is about to consider the extent to which, if at all, the existence of the concrete category, rent, undermines or at least forces a modification of the basic starting point for political economy the law of value.

While paying full tribute to Ricardos attempt to create a systematic science of political economy in this way, Marx none the less drew attention to the basic weaknesses which still remained with Ricardo, ones which prevented him from carrying through his intended task to completion. It would be very wrong to see these defects in Ricardos political economy as resting merely on the conclusions at which Ricardo arrived: Marxs criticisms went far beyond an objection to Ricardos conclusions, important though his criticisms were in this respect. Marx objected to the very structure and method of Ricardos work. We have already noted that in his opening chapter he deals with a series of phenomena to discover whether they can be reconciled with the law of value. Ricardo considers wages and considers that their level is independent of the value of commodities. Here was a significant step forward from Smith, who continually allows a consideration of the wage level to intrude into his analysis. Ricardo says Labour of different qualities differently rewarded. This is no cause of variation in the relative value of commodities. This point is elaborated a little later when we find:

The proportion which might be paid for wages is of the utmost importance in the question of profits; for it must at once be seen, that profits would be high or low, exactly in proportion as wages were low or high; but it could not in the lease affect the relative value (of fish and game) as wages would be high or low at the same time in both occupations.

Having from the start rejected Smiths contention that the emergence of wages undermines (or seriously limits) the law of value, Ricardo then continues (in the third section of the opening chapter) to deal with the impact of the fact that fixed and circulating capital exist in different proportions; the fifth section of this same chapter discusses how far a rise or fall in wages calls for a modification of the initial value analysis, given the existence of capital of varying durability and unequal rate of turnover in different spheres of production. Marx, after reviewing the structure of this chapter, makes what is a crucial observation:

Thus one can see that in this first chapter not only are commodities assumed to exist- and when considering value as such, nothing further is required [authors italics]  but also wages, capital, profit, the general rate of profit and even, as we see, the various forms of capital as they arise from the process of circulation, and also the difference between natural and market price . . . In order to carry out this investigation he introduces not only, en passant, the relationship of market price and real price (monetary expression of value) but the whole of capitalist production [authors italics] and his entire conception of the relationship between wages and profits. (Marx)

Here, it would seem, lies the essence of Marxs attack upon political economy and the key to understanding why he rejected both its fundamental conceptions as well as its method of inquiry. For Marx is stressing that Ricardo started by assuming as given the very phenomena  the developed relations of bourgeois economy  which he sought to explain. This faulty procedure, which at one point Marx likens to giving the science before the science was precisely a reflection of the ahistoricism of political economy. It should be emphasised here that Marx never attacked Ricardos work because of its abstract quality; on the contrary it was this abstract quality which so appealed to him. He did, however, find fault with the forced and inadequate nature of the abstractions which Ricardo employed. It was because he commenced by assuming the relations of bourgeois economy that Ricardo tended to counterpose directly the outward appearance taken by these relations on the surface of society with their inner source, which Ricardo had identified as the law of value. Entirely missing from Ricardos work is any examination of the historical and logical paths by which this (inner) law actually develops to produce the surface relations of bourgeois economy. Or, to put this same point another way, Ricardo fails to trace the manifold and contradictory links (mediations) between this relatively hidden inner determination (law of value) and the immediate phenomena, or phenomenal forms, in which this law finds its expression (prices, profits, interest, rent, etc.). When Marx noted that all science would be superfluous if the outward appearance and the essence of things directly coincided (III), he was by implication rejecting the entire method which lay at the foundation of Ricardos work. We are here insisting that the mistakes in Ricardos analysis were not isolated questions which Marx corrected or attempted to correct. Ricardos false understanding of the relationship between value and price for instance (the transformation of values into prices) arose from the fact that the immediate, day-to-day expressions of bourgeois production relations (in this case prices) were allowed to stand in the way of his presentation of the law of value.

The structure of Marxs work

In connection with these last points, it certainly can be considered no accident that the structure of Marxs work is not merely different from Ricardos, but in essence is its very opposite. Whereas in the case of Ricardo all the historically developed economic relations of modern society are dealt with at the very start of his work, quite the reverse is true in the case of Capital. Marx, in this work, shows not in an opening chapter, but over three entire volumes, how all the economic relations of bourgeois economy grow  and this growth is both logical and historical  out of the relations of simple commodity production. And in a fourth volume (Theories of Surplus Value) the theoretical reflection of this contradictory process in the work of all the leading political economists is examined. Thus Marx is aiming to demonstrate that the essence of all the contradictions of bourgeois economy (which to the reformist or the liberal appear to be a series of isolated problems to be tackled independently of each other) has a common source within the commodity relation itself; but at the same time the growth and development of this, the fundamental contradiction, has to be demonstrated. Thus while it would certainly be wrong to think that all relations of bourgeois economy (let alone of politics, ideology, etc.) can be explained by direct reference to Marxs opening chapter, it would be equally erroneous to believe that these more complex relations can be considered in isolation from Marxs analysis of the commodity. Lenin sums up the point at issue when he writes:

In his Capital, Marx first analyses the simplest, most ordinary and fundamental, most common and everyday relation of bourgeois (commodity) society, a relation encountered billions of times, viz. the exchange of commodities. In this very simple phenomenon (in this cell of bourgeois society) analysis reveals all the contradictions (or the germs of all the contradictions) of modern society. The subsequent exposition shows us the development (both growth and movement) of these contradictions, and of the society in the summation of its individual parts, from its beginning to its end. (LCW, vol. 38)

Thus in the first volume of Capital Marx investigates the genesis of capital, revealing that its origins lie in simple commodity production and exchange, and the further development of simple commodity production in the form of money. Having demonstrated that capital is a historically formed social relation (and not something to be assumed as given, as with Ricardo) Marx goes on to deal with the general nature of the relationship between wage labour and capital. In the second volume he is concerned with the turnover of capital and the way in which this and other factors modify the analysis already made. Having completed these tasks, only now is Marx able (in the third volume) to deal with the surface phenomena of bourgeois economy and the reflection of these phenomena in the consciousness of the agents of production as well as in political economy. In this way Marx is able to show that the appearances of bourgeois economy are not natural, but a product of definite historically formed social relations and, second, that the consciousness of these relations is also not arbitrary  not merely a false consciousness in this sense  but is itself an objective product of these social relations. This tracing of the contradictory connection between social relations on the one hand and social consciousness on the other was precisely what was needed to demonstrate the validity of historical materialism, the testing out of which Lenin considered to be the real task of Capital. But at the same time it was the essence of Marxs critique of political economy in this sense: Marx had to show that the conceptions of political economy were not pure illusions, in the sense of the mistakes of individual thinkers, but were a product of and expressed objectively existing social relations in a necessarily contradictory and inverted form. Marx indicates the nature of this method at the start of the third volume:

In Book I we analysed the phenomena which constitute the process of capitalist production as such, as the immediate productive process, with no regard for any of the secondary effects or outside influences. But this immediate process of production does not exhaust the life span of capital. It is supplemented in the actual world by the process of circulation, which was the object of study in Book II. In the latter, namely Part III, which treated the process of circulation as a medium for the process of social reproduction, it developed that the process of capitalist production taken as a whole represents a synthesis of the processes of production and circulation. Considering what this third book treats, it cannot confine itself to general reflection relative to this synthesis. On the contrary, it must locate and describe the concrete forms which grow out of the movements of capitalas a whole. In their actual movement capitals confront each other in such concrete shape, for which the form of capital in the immediate process of production, just as its form in the process of circulation, appear only as special instances. The various forms of capital, as evolved in this book, thus approach step by step the form which they assume on the surface of society, in the action of different capitals on one another, in competition, and in the ordinary consciousness of the agents of production themselves. (III, authors italics)

What Marx calls the faulty architectonics of Ricardos work stemmed from the fact that he felt no need to investigate the basic economic categories; he pre-supposed them. It was this faulty structure of the work, Marx felt, which led to a series of interconnected theoretical misconceptions, misconceptions which exposed Ricardianism to the successful attack of its opponents. Comparing Smith and Ricardo, Marx emphasises both his indebtedness to the advances which the Principles mark, but at the same time the inadequacy of its method. The point is summarised like this:

Adam Smith . . . first correctly interprets the value and the relation existing between profit, wages, etc. as component parts of this value, and then proceeds the other way round, regards the prices of wages, profit and rent as antecedent factors and seeks to determine them independently, in order to compose the price of the commodity out of them. The meaning of this change of approach is that first he grasps the problem in its inner relationships, and then in the reverse form, as it appears in competition. These two concepts of his run counter to one another in his work, naively, without his being aware of the contradiction. Ricardo, on the other hand, consciously abstracts from the form of competition, from the appearance of competition, in order to comprehend the laws as such. On the one hand he must be reproached for not going far enough, for not carrying his abstraction to completion, for instance when he analyses the value of the commodity, he at once allows himself to be influenced by consideration of all kinds of concrete conditions. On the other hand, one must reproach him for regarding the phenomenal form as immediate and direct proof or exposition of these general laws, and for failing to interpret it. In regard to the first, his abstraction is too incomplete; in regard to the second, it is formal abstraction which in itself is wrong. (Marx)

This same point is repeated by Marx elsewhere, as follows:

Classical political economy seeks to reduce the various fixed and mutually alien forms of wealth to their inner unity by means of analysis and to strip away the form in which they exist independently alongside one another . . . It often attempts directly, leaving out the immediate links, to carry through the reduction and prove that the various forms are derived from one and the same source. This is however a necessary consequence of its analytical method, with which criticism and understanding must begin. Classical economy is not interested in elaborating how the various forms come into being, but seeks to reduce them to their unity by means of analysis, because it starts from them as given premises. But analysis is the prerequisite of genetical presentation and of the understanding of the real, formative process and its different phases. (Marx, Theories of Surplus Value, authors italics)